TORONTO, July 25 (Reuters) - The Canadian dollar firmed
against its U.S. counterpart on Monday morning after a failure
to reach a deal to raise the U.S. debt ceiling weighed heavily
on the U.S. dollar.

The breakdown in U.S. budget talks fueled demand for
perceived safe-haven currencies, as the greenback hit a record
low versus the Swiss franc and a four-month trough against the
yen. [FRX/]

But the Canadian dollar -- which usually trades alongside
riskier assets such as equities and commodities -- bucked the
broad flight-to-safety trend, and benefited as well.

"People more and more are seeing Canada as a place where
you can put money more safely," said Charles St-Arnaud,
Canadian economist and currency strategist with Nomura
Securities International in New York.

"It's mainly a flight to safety given what's going on in
the United States ... people look at the second best solution.
They want a triple-A government that has a decent sized bond
market."

Most investors expect a U.S. deal will be done before the
Aug. 2 deadline to avert default, but the lack of progress in
talks over how to cut the budget deficit and raise the debt
ceiling, heightened the possibility of a ratings downgrade of
U.S. debt and weighed on risk sentiment, which analysts said
would keep dogging the greenback. [nN1E76M0B0][ID:nN1E76N0CA]
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